Partnership

Dissolution

Easy

Meena and Tina are partners in a firm and sharing profit as 3:2. They decided to dissolve their firm on March 31, 2017 when their Balance Sheet was as follows:

Balance Sheet Meena and Tina as on March 31, 2017

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
Capital		Machinery	70,000
Meena 90,000		Investments	50,000
Tina 80,000	1,70,000	Stock	22,000
Sundry creditors	60,000	Sundry Debtors	1,03,000
Bills payable	20,000	Cash at bank	5,000
	2,50,000		2,50,000

The assets and liabilities were disposed off as follows:

a. Machinery were given to creditors in full settlement of their account and stock were given bill payable in full settlement.

b. Investment were took over by Tina at book value. Sundry debtors of book value Rs. 50,000 took over by Meena at 10% less and remaining debtors realised Rs. 51,000.

c. Realisation expenses amount to Rs. 2,000.

State Journal entry for payment of realisation expenses.

Realisation Expenses A/c Dr. Rs. 2,000 To Realisation A/c Rs. 2,000

Realisation A/c Dr. Rs. 2,000 To Realisation Expenses A/c Rs. 2,000

Realisation A/c Dr. Rs. 2,000 To Bank A/c Rs. 2,000

Bank A/c Dr. Rs. 2,000 To Realisation A/c Rs. 2,000

✅ Correct Option: 3

Realisation expenses paid by the firm in cash are debited to Realisation A/c and credited to Bank A/c. The entry is: Realisation A/c Dr. Rs. 2,000 To Bank A/c Rs. 2,000.

Question 46

When a creditor accepts an asset whose value is more than the amount due to him, he will _______ the excess amount which will be credited to _______ Account.

Question 47

Which mode of dissolution is highlighted in the above case?

Question 48

Identify the amount realised in cash from Sundry Debtors.

Question 50

State Journal entry for realisation of investment.

State Journal entry for payment of realisation expenses.

Solution

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